TORONTO (CP) -- Inmet Mining Corp.'s [TSX:IMN] $345-million cash bid for Petaquilla Copper Ltd. [TSX:PTC] fits well into Inmet's strategy for growth, chairman and CEO Richard Ross assured investors and analysts on Monday.
The $2-per-share offer _ aimed to clear away an obstacle to smooth development of the Petaquilla copper deposit in Panama _ ''is very consistent with our strategy to grow responsibly as a base-metal mining company,'' Ross told a conference call.
Vancouver-based Petaquilla's stock shot up more than 100 per cent after Toronto-headquartered Inmet revealed its offer. Inmet shares rose more than one per cent.
The bid was more than double Petaquilla's closing price Friday of 96 cents on the TSX _ down from $4.20 a year ago.
Petaquilla Copper stock closed up 98 cents to $1.94 as the second-most-active issue on the Toronto Stock Exchange with 16.5 million shares traded.
Inmet shares closed up 99 cents to $64.51, or 1.5 per cent.
Ross said the Petaquilla open-face project is ''potentially the most important source of long-term growth of copper production for Inmet,'' with an expected life of 23 years or more.
''One of the rationales for this transaction is to streamline the shareholding structure,'' especially with regards to the other partner in the project, Teck Cominco Ltd. [TSX:TCK.B], said Ross.
Petaquilla Copper claims to own 52 per cent of the Panamanian development _ a holding that is disputed by Teck Cominco _ with the other 48 per cent held by Inmet.
Teck claims a 26 per cent stake after delivering in March what it characterized as a final commitment to participate in the mine.
This dispute is tied up in arbitration and Inmet sides with Teck Cominco, which has funded front-end engineering and design costs.
Petaquilla Copper asserts that Teck failed to satisfy conditions to make the final commitment and therefore its interest in the deposit was terminated.
Inmet was ''extremely disappointed'' with this position, after it signed a deal with Teck in March intended to bring the development into production by 2013.
Orest Wowkodaw, an analyst with Canaccord Adams, said the takeover move is positive for Inmet, helping it move forward on the mine, whose expected costs have more than doubled to US$3.5 billion.
''The project had been placed in limbo from a development point of view based on the ongoing arbitration between Petaquilla Copper and Teck Cominco,'' he said.
''Because Petaquilla Copper represents such a huge part of Inmet's growth ... they've decided to pay up now, basically to expedite development.''
For Teck Cominco, Wowkodaw said, ''nothing changes between the side agreement that was done between Teck and Inmet.''
Inmet notifed Teck Cominco of its intention to make the offer to Petaquilla Copper shareholders, Ross said.
''We continue to have excellent relations with Teck Cominco,'' he said, ''as evidenced in the arrangements that we entered into prior to March 31, where we took over funding and management of this project.''
The offer is conditional on acceptance by at least half of Petaquilla Copper investors, and Inmet said it has lock-up agreements with institutions owning 9.4 per cent of the company.
Inmet does not need regulatory clearance for the offer from the Panamanian government, he added.
Analyst Wowkodaw has a ''hold'' rating with an $80 share price target on Inmet, which has four producing mines _ the Cayeli copper-zinc mine in Turkey, the Pyhasalmi copper-zinc mine in Finland, the Troilus copper-gold operation in northwest Quebec and the Ok Tedi copper-gold site in Papua New Guinea. It also has interests in copper developments in Spain and Turkey.
(c) The Canadian Press 2008